Economic news

Gold Ticks Up as Dollar Rally Lulls; Rate-Hike Fears Linger

  • Gold rises nearly 1% during the session
  • Gold will remain beholden to shifting rate hike expectations-analyst

Sept 6 (Reuters) - Gold prices gained on Tuesday as the blistering U.S. dollar rally took a pause, although lingering worries around rapid interest rate hikes globally to tame inflation kept bullion gains in check.

Spot gold was up 0.3% at $1,714.92 per ounce as of 0828 GMT. Prices hit a one-week high after rising nearly 1% earlier in the session.

U.S. gold futures rose 0.2 % to $1,726.00.

"Dollar's slight pullback has eased some of the immediate downward pressures on gold. Bullion bulls have shown once again their propensity for buying gold's dips below $1,700," said Han Tan, chief market analyst at Exinity.

The dollar index eased 0.2% against its rivals, after hitting a 20-year high in the previous session. A weaker dollar makes gold cheaper for overseas buyers.

Traders' focus shifts to the European Central Bank's rate action when it meets on Thursday. The market also expects a big interest rate hike from the U.S. Federal Reserve in its Sept. 20-21 policy meeting.

"The upcoming U.S. CPI print, followed by the FOMC meeting, are set to be key event risks for gold. Ultimately, spot gold is set to remain beholden to shifting expectations surrounding the Fed's ongoing battle against inflation," Tan added.

Gold is known as a safe-investment amid economic uncertainties. But investors opt for other assets in a high-interest rate environment as gold yields no interest.

"What could come to its (gold's) rescue is weaker macro data (the August jobs number helped) and lower inflation readings... But until that happens, rallies remain vulnerable," Edward Meir, an analyst with ED&F Man Capital Markets, wrote in a note.

Meanwhile, India's gold imports in August halved from a year ago, a government source told Reuters.

Elsewhere, spot silver rose 1.4% to $18.41 per ounce, platinum was 0.5% higher at $849.96 and palladium gained 1.3% to $2,059.26.

Reporting by Ashitha Shivaprasad and Eileen Soreng in Bengaluru; Editing by Krishna Chandra Eluri

Source: Reuters


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